Jan 18, 2021
Why Insured finance could be a game changer in smart contract insurance
The need for smart contract insurance is now more than ever as the TVL in Defi is around 24 Billion $ as of now. More and more Defi Projects churn out each day and with them comes the great fear of rug pull and bugs in smart contract.
Even the security audits done on the smart contracts does not prevent the smart contracts to be exploited because of vulnerabilities.
Examples of Vulnerabilities and Rug pulls:
a) https://medium.com/opyn/opyn-eth-put-exploit-c5565c528ad2
b) https://samczsun.com/escaping-the-dark-forest/ (A notable article from Samczsun regarding the vulnerabilities of Lien finance which was already audited and how he worked around to safeguard the funds)
With all the above craziness, it makes sense to have insurance cover for smart contracts. Just like we have cover for our vehicle / life, it makes sense to take cover for the thousands of dollars of money we are putting in.
Nexas Mutuals — The Big guy:
There is no denying that the nexas mutuals is the big guy in the smart contracts insurance industry. They were the pioneers in this area and infact had around 200 Million $ of active cover during a time and at certain point they even ran out of coverage as this is due to their architecture (Example: https://cryptobriefing.com/nexus-mutual-just-ran-out-defi-coverage-heres-why/). While there were steps to negate this with the use of WNXM tokens, yinsure and even issuing NFTs for coverage, there were still lot of things that can be improve on Nexas Mutuals architecture.
Enter — Insured Finance:
a) Insured Finance is built on Polkadot — Many may ask why Polkadot? what is so unique about them? Ethereum is still the master of DeFi. Well that’s about to change. If anyone has seen substrate, it is the most customizable blockchain SDK anyone can get. Add to the top of parachains building collective security and on top of that Add ethereum co-founder being the creator. Of course Polkadot has a long way to go. But one should not forget how polkadot is designed and how effective they can act as a bridge to multiple chains. So Insured finance isn’t struck on a single chain and imagine the possibility of providing cover to multiple chains and growth potential.
b) No KYC required — That’s right No KYC required on insured finance. Users can get coverage from their web-based wallet with no need for KYC. Insurance possibilities are extremely flexible and easy to use. Users specify the holdings they wish to insure and the request is broadcast to the market. Exchange hacks, stablecoin failures, and smart contract exploits can all be covered.
c) Earn Yield — Those that provide coverage earn a return on their funds. The riskier the coverage, the greater the returns. The entire premium of each insurance contract is rewarded to those that provide coverage.
Many great VCs like Vysyn, Vendetta capital have invested in this. So lets watch out for this great project!!
